Modi Vows to “Pay a Very Heavy Price” as Trade War with US Escalates
Indian prime minister, Narendra Modi, has stated he is prepared to endure notable consequences to resist US pressure on India‘s trade policies, following the imposition of punitive export tariffs by the US.
US President Trump signed an executive order on Wednesday, enacting an additional 25% tariff on Indian goods, citing continued Indian purchases of Russian oil as justification for punishing what he termed “fuelling Russia’s war machine.” This new tariff adds to a previously announced 25% tariff on Indian exports.India’s foreign ministry swiftly condemned the additional tariff as “unfair, unjustified and unreasonable,” accusing the US of applying double standards as other nations importing Russian oil have not faced similar penalties.
In a speech Wednesday night, Modi addressed key issues in India’s trade negotiations with the US, appearing resolute without directly referencing Trump or the new tariffs.
According to Indian officials, the US has been pressing India to permit the import of American genetically modified (GM) crops and allow duty-free imports of US farm and dairy products. However, protecting India’s vast farming population is a sensitive political issue for the Modi government, with officials declaring these areas “non-negotiable on principle” and maintaining a firm stance against “import[ing] GM” products.Modi echoed this sentiment in his speech, stating, “India will never compromise on the interests of its farmers, livestock rearers and fisherfolk,” and adding, “And I know that I will personally have to pay a very heavy price for this, but I am ready.”
Trade negotiations between Indian and US officials are currently stalled due to Trump’s proclamation of a total 50% tariff on India, scheduled to take effect on August 27th unless a deal is reached.
shashi Tharoor, a Congress party MP, suggested the tariffs may carry “some other hidden message from Washington” and advocated for India to “also impose a 50% tariff on US goods.”
Mallikarjun Kharge, president of the Congress party, criticised the US attempt to coerce India into altering its trade and foreign policies, particularly its long-standing relationship with Russia, asserting, “India’s national interest is supreme… Any nation that arbitrarily penalises India… doesn’t understand the steel frame India is made of.”
Opposition figures have also directed criticism towards the BJP government and Modi himself, with MP Tejashwi Yadav accusing the prime minister of “dancing to America’s tune.”
Recent Indian media coverage had previously highlighted the benefits of the “special relationship” between Modi and Trump, but by wednesday, sentiment had shifted towards anti-American and anti-Trump views.
Proposed US Tariffs Threaten Indian Exports, Experts Urge Domestic Reforms
New tariffs proposed by former US President Donald Trump pose a significant threat to Indian exports, particularly in key sectors like textiles, apparel, auto components, steel, and gems.The potential imposition of a 50% tariff on Indian goods entering the US market has sparked concern among Indian export organizations and economists. https://www.theguardian.com/us-news/2025/aug/07/more-than-60-countries-scramble-respond-donald-trump-latest-tariffs
SC Ralhan, president of the Federation of Indian Export Organisations, stated that nearly 55% of India’s shipments to the US would be affected by the proposed tariffs. This comes as over 60 countries are scrambling to respond to Trump’s latest tariff proposals. https://www.theguardian.com/us-news/2025/aug/07/more-than-60-countries-scramble-respond-donald-trump-latest-tariffs
The US is a crucial export destination for India, and the tariffs could disproportionately impact smaller businesses, particularly within the textile and apparel industries. Prerna Prabhakar, a senior associate at the Center for Social and Economic Progress, a Delhi-based think tank, warned that certain sectors would “have a very, very hard time” adapting to the increased costs.
However, Prabhakar argues that India’s response should not be to retaliate with its own tariffs.She points out that India currently accounts for only 2% of global exports, in part due to its own relatively high tariff rates. Rather, she advocates for a strategy focused on reducing domestic tariffs to enhance competitiveness and forge new trade partnerships with regions like the European Union, Africa, and Latin America.
“If India wants to offset this problem of being at a disadvantage in the US market, it has to work on its own competitiveness issues,” Prabhakar emphasized. “Fundamental to that is lowering its own tariffs.”